In the negotiation on reform of the Stability Pact “the negotiations focused mainly on the minimum adjustments requested when a member state is in excessive deficit procedure and on their modulation based on investments and reforms. On the table there is a compromise prepared by France, Germany, Italy and the Spanish presidency – we learn from diplomatic sources –. States undertake to examine it constructively. It will take into account the impact of rising interest rates over the period 2025-2027 and provide the necessary room for maneuver to continue investing and undertaking structural reforms.”
On the reform of the Stability Pact during the night “We had a positive discussion. Substantial progress has been made towards a good balance between safeguards and the need to find space for investment and growth. The mission is not accomplished. We need further work but I am confident that an agreement can be reached in the coming days“, said the EU Commissioner for Economy Paolo Gentiloni arriving at Ecofin. “We can be sufficiently confident that there will be an agreement by the end of the year,” she stressed.
“Today at the Ecofin meeting the revision of 13 Pnrr will be approved, including the Italian one and this will naturally be a push to continue working and accelerate the implementation of the recovery plans which are part of this important need to strengthen investments” , said the EU Commissioner for Economy.
“We hope to conclude” on the reform of the Stability Pact “in the next few days and, if necessary, we will also convene an extraordinary meeting of Ecofin so that we can conclude a political agreement by the end of the year”, he explained Spanish Deputy Prime Minister Nadia Calvino, to the rotating presidency of the EU arriving at the Ecofin meeting in Brussels. If it will be necessary to convene an extraordinary Ecofin Council to complete the work and have the green light on the reform of the Stability Pact “it will be after the European Council, therefore in the week from 18 December”, explained the Spanish deputy prime minister. The European Council will meet on 14 and 15 December.
For an agreement on the reform of the Stability Pact “we are now at 92%”, he said German Finance Minister Christian Lindner arriving at the Ecofin meeting in Brussels. “Some countries” highlighted in the negotiations “that with an excessive deficit procedure there could be something like a golden rule for investments. I am convinced that it is excessive. Deficits must be reduced not justified.”
“The progress made testifies that there is a recognition of the fact that we are not in a normal situation, there is a war in Europe – the minister said Giancarlo Giorgetti regarding the negotiation of the Stability Pact in Brussels, in a written declaration released on the sidelines of Ecofin -. We believe that the new fiscal rules must be consistent with the objectives defined at European level, in particular with the challenges of climate change and with particular reference to defence”. On the reform of the Pact “we have made some progress, but we are not at the final agreement”, Giorgetti said again. “Specific special conditions for a transitional period must be ensured.” There must be coherence “between the fiscal rules we propose” and “the strategic, political objectives defined at European level”, on “defense and security and the climate change challenge that we must face by supporting investments”. “The hope is obviously to reach a conclusion as soon as possible in an extraordinary Ecofin before the end of the year”.
“Italy’s position is always the same, that we are living in exceptional circumstances, that we need a transitional period” for the reduction of the debt and the deficit, “that takes them into account. And that the strategic objectives that l ‘The EU has given itself in terms of security, environmental, energy and digital,’ explained Giorgetti on the sidelines of Ecofin.
Holding firm the excessive deficit procedure with a minimum annual structural adjustment of 0.5% “as a benchmark”, “in the context of significantly changed interests and far-reaching investment challenges in the context of the dual transition and geopolitical challenges , the Commission may, for a transitional period in 2025, 2026 and 2027, in order not to compromise the positive effect of the PNRR, take into account the increase in interest paid in the calculation of the adjustment effort under the excessive deficit procedure “. It emerges in the latest document from the Spanish Presidency on the Pact. Among the transitional provisions, the reform of the Pact provides that “the commitments included in the Pnrr approved by the member states” will be taken into consideration “for the extension of the adjustment period” if the Pnrr “contains significant reforms and investments in the period” to improve ” fiscal sustainability” – we read in the latest compromise text – and “potential growth of the economy” with the commitment to “continue the reform effort in the remaining part of the structural fiscal plan, as well as to maintain the level of investments financed at national level achieved on average in the period covered by the Pnrr”.
During the night, the work of the pre-Ecofin dinner, convened to seek an agreement on the reform of the Stability Pact, ended without an agreement. This is what we learn from diplomatic sources familiar with the negotiations, who speak of “good progress” recorded, but report the need for further political and legal consultations. The rotating Spanish presidency of the EU will evaluate how to proceed and the idea of a possible new extraordinary Ecofin.
“This evening we have made essential progress on the reform of European fiscal rules, in particular thanks to the Spanish Presidency. An agreement in the Council should be reached by the end of the year. This agreement will set coherent rules and recognize the importance of investments and reforms. Let’s continue!”, declared the French Finance Minister Bruno Le Maire after the Ecofin dinner which ended just before 4 on the reform of the Stability Pact.
The speech by the Minister of Economy, Giancarlo Giorgetti, during the Ecofin dinner reiterated some of the concepts already expressed in recent days, starting from what he said in his speech to the budget committee of the House and Senate on Tuesday. This is what we learn from Italian sources. Giorgetti pointed out, for example, that tax rules must be consistent with the political objectives of the countries and more generally of Europe, also envisaged by the Pnrr, with the green and digital transition and with defence. According to the minister, debt reduction must be gradual, realistic and sustainable. Giorgetti then expressed appreciation for France’s words which underlined the importance of having flexibility in the rules. A similarity with Italy’s position emerged in the intervention of Finland, with Minister Riikka Purra, who expressed herself in favor of an extension of the debt repayment from 4 to 7 years and with respect to the idea that each country must make further commitments after the PNRR expires in 2027.
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